In September, we talked to you about the draft law on mortgage loans that the Luxembourg government was in the process of implementing. 2 months later, where are we in the discussions?

Protection of banks and consumers

Consumers should be better protected. In particular, banks will be required to provide a document to the borrower that concretely explains what happens after they obtain the loan: prepayment rights, relative costs, etc.

As for the banks themselves, they will have the obligation to verify the consumer’s solvency before closing the contract. This is in order to ensure the ability to repay the loan and to verify that a delicate situation is not, a priori, on the agenda.

A credit limit for early redemption

The main advantage of the draft law is that it makes it possible to limit the costs resulting from an early repayment of a mortgage to 6 months’ interest. This is very good news, as it considerably reduces the penalty charges for consumers, which are currently very high.

Yes, but...it seems that this rule of 6 months of maximum interest will only apply to credits that do not exceed 450,000 €. This amount seems ridiculous when one knows the price of real estate in Luxembourg, and which speaks volumes before the project has even been released and validated.

A priori, the text is close to completion, the final touches have been made, and it won’t be long until we are made aware of the actual fixed content of this new law. The vote is scheduled to take place in the House before the end of the year. In any case, the draft law will have a retroactive effect, and all real estate loans concluded after March 21, 2016 will be eligible for its benefits.

Other recent articles:
How about trying out a home before buying it?
Real estate ads: Avoid the scams!
Winter is coming: here are a few tips to reduce your heating bills
The Impact of the 2017 Tax Reform in the Field of Real Estate
Buying an apartment in Luxembourg, but at what price?
Will mortgage payments stop during parental leave?
Property in Luxembourg: Home sweet home?
Mortgage: fewer penalties in cases of early repayment?
Everything you need to know about real-estate credit in Luxembourg - Part 2
Everything you need to know about real-estate credit in Luxembourg